Foster & Ors v Meller & Anor (No 2)
[2008] VSC 447
•21 October 2008
Wher
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. Prob 55 of 2007
| RAYMOND GIBSON FOSTER | Plaintiffs |
| RICKY BORDE | |
| ANTHONY JOSEPH ZUCCO | |
| v | |
| DAVID MELLER | Defendants |
| PETER ARNOLD SHATTOCK |
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JUDGE: | JUDD J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 October 2008 | |
DATE OF JUDGMENT: | 21 October 2008 | |
CASE MAY BE CITED AS: | Foster & ors v Meller & Anor (No 2) | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 447 | |
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PROBATE – Costs – Suspicious circumstances – Testator’s conduct cause of litigation – Beneficiaries involved in procuring the Will – Unsuccessful party’s costs paid out of residuary estate
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr R Wells | Davis Zucco Lawyers |
| For the Defendants | Mr RT Waddell | Harry M Hearn Solicitors |
HIS HONOUR:
On 10 September 2008 I delivered judgment in this proceeding and propose to make an order granting probate of the will of Maria Henrietta Meller made 27 February 2004. The parties have been unable to resolve the question of costs and thus it remains for the court to do so.
The defendants submit that their costs on a solicitor and client basis should be paid out of the residuary estate. The plaintiffs submit that the defendants should only be allowed their costs out of the estate, on a party/party basis, up to and including 28 March 2007, or calculated to a time shortly thereafter with no other order for costs. The plaintiffs support this submission on the basis that the real issue between the parties from that date was the question of Mrs Meller’s testamentary capacity.
The plaintiffs submit that upon receipt by the defendants of the second affidavit of Mr Zucco sworn 28 March 2007, the defendants ought to have accepted that there could be no genuine dispute about the knowledge and approval of the will at the time of execution. Mr Zucco’s affidavit was prepared and served together with affidavits of Ms Mastromanno and Ms Marchio and a second affidavit of Dr Szental.
The plaintiffs also submit that an order for payment out of the estate of costs incurred by the defendants should not include costs in connection with the evidence or assistance provided by Dr Sutcliffe; and that some further general reduction should be made for prosecuting the ground of undue influence which was abandoned on the second day of the trial. They submit that the appropriate order for costs is that the plaintiffs pay out of the estate of the deceased 80% of the defendants’ costs of and incidental to this proceeding up to and including 28 March 2007 (or such other date as the court may deem appropriate), but excluding all costs relating to the evidence of Dr Sutcliffe.
While the prima facie rule is that costs follow the event there are a number of recognised exceptions in probate cases. In Mitchell v Gard[1], a case where the will was upheld and admitted to probate, Sir JP Wilde held on a motion for costs, that, due to the misconduct of the residuary legatee, the next of kin had a reasonable ground for opposing probate and ordered that their costs be paid out of the estate even though they failed to prove, amongst other things, undue influence. The court recited two rules for future guidance:
First, if the cause of litigation takes its origin in the fault of the testator or those interested in the residue, the costs may properly be paid out of the estate; secondly, if there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question either the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.
These two rules of exception were reformulated in Re Estate of Hodges (deceased); Shorter v Hodges[2] in terms substantially adopted by Whelan J in Di Cecco v Contini.[3]
[1](1863) 3 SW. & TR. 275
[2](1988) 14 NSWLR 698 at 709.
[3][2004] VSC 243 at para 3.
The plaintiffs submit that while the present case may fall within the first rule until 28 March or thereabouts, from that time onwards it fell within the second rule because the defendants should have understood that their challenge to knowledge and approval was without substance. They contend that under the second rule or exception there should be no order as to costs, leaving the defendants to bear their own.
The two rules formulated in Mitchell v Gard, and repeated thereafter in numerous cases, were not intended as a formulation of any exact rule. As was noted by the court in that case it would hardly be in the nature of a discretion that its exercise should be adjusted by exact rule. The rules were formulated for future guidance and derived from a consideration of factors including the function of the court when confronted by evidence raising a doubt as to testamentary capacity or improper conduct inducing litigation. In Mitchell v Gard the court held,[4]
It is the function of this court to investigate the execution of her will and the capacity of the maker and having done so, to ascertain and declare what is the will of the testator. If fair circumstances of doubt or suspicion arise to obscure that question, a judicial inquiry is in a manner formed upon it. Those who are instrumental in bringing about and subserving this inquiry are not wholly in the wrong, even if they do not succeed. And so it comes that this court has been in the practice on such occasions of deviating from the common rule in other courts, and of relieving the losing party from costs, if chargeable with no other blame than that of having failed in suit which was justified by good and sufficient grounds for doubt.
There is still a further class of cases. I speak of those in which, beyond the execution of the will and the capacity of the testator, the opposing party takes upon himself to question the conduct or the good faith of others, and to place on the record pleas of undue influence or fraud. These are affirmative charges; they ought not to be made except upon some apparently very sufficient ground. But though they may and do differ largely in the degree of probability or suspicion to be demanded for their justification, it is not easy to say that they differ in nature from pleas denying execution or capacity. Both classes of defence are addressed to the same question, what was the will of the testator, and both are within the scope of the subject entrusted to the vigilance of the court. Here, also, it seems just and meek, if the circumstances of the case have rendered the inquiry a proper one, that neither party should be condemned in costs.
[4]Mitchell v Gard (1863) 3 SW&TR 275, 277.
In the present case the plaintiffs successfully sought to propound the will of Mrs Meller made 27 February 2004. The defendants, as caveators, initially raised three objections: absence of testamentary capacity, absence of knowledge and approval; and undue influence. The plaintiffs bore the onus of proving that the will was that of free and capable testator. They also bore the onus of proving knowledge and approval. The allegation of undue influence received little if any attention in the affidavit evidence placed before the court and was formally abandoned on the morning of the second day of trial. It was not a live issue in the proceeding. The case proceeded to resolution on the remaining two grounds. The defendants did not make any affirmative charges.
The plaintiffs submit that, while there were suspicious circumstances surrounding the making of the will so as to impose upon them the obligation to prove knowledge and approval and the righteousness of the will, they should be taken to have discharged that obligation, to the satisfaction of the defendants, by serving the affidavit of Mr Zucco sworn 28 March 2007. Thus, so the plaintiffs argue, the requirement that the court adjudicate on the issue became no more than a technical requirement. I disagree.
The defendants could not be expected to respond to the affidavits filed on 28 March 2007 as the plaintiffs submit; and nor can an assessment of knowledge and approval, where suspicious circumstances have been found to exist, be properly characterised as technical. Proof of testamentary capacity does not establish knowledge and approval.
The evidence of Mr Zucco bore upon the testamentary capacity of Mrs Meller as well as her knowledge and approval of the will. So did the evidence of other witnesses. Mr Zucco attended upon Mrs Meller to take instructions, engrossed the document and again, with two law clerks, attended on her to have her approve and execute the will.
The evidence given by Mr Zucco was not confined to his affidavit. He gave oral evidence and was cross-examined on behalf of the defendants in relation to matters relevant to testamentary capacity and knowledge and approval. Some of his conduct as a solicitor, engaged on behalf of Mrs Meller, left him exposed to criticism. He was initially Ms Borde’s solicitor; he did not insist upon obtaining and reviewing a copy of the previous will; he did not inquire, in any detail, into the nature and extent of Mrs Meller’s assets, as would ordinarily be expected of a solicitor engaged to act on behalf of a frail and elderly woman; he did not inquire into the circumstances in which the draft will, delivered to him in unusual circumstances, had been prepared. Had Mr Zucco made these inquiries I have little doubt that he would have approached his task differently. Mr Zucco may not have accepted the retainer. But if he chose to accept it, as a fully informed solicitor, he would have been very careful to discharge his duties in such a manner as to avoid the potential for suspicious circumstances to compromise the validity of the will and provoke litigation.
The affidavits filed on behalf of Ms Mastromanno and Ms Marchio were, as I observed in my reasons for judgment, less than satisfactory. They contained formulaic paragraphs and in the case of Ms Marchio, the final paragraph contained a repetitive phrase which had been overlooked by those preparing it and by Ms Marchio when she swore the affidavit. I do not regard those affidavits as necessarily assuaging the legitimate concerns of the defendants about the circumstances in which the will was prepared and executed.
In my opinion the litigation was caused by the circumstances which justified doubt as to Mrs Meller’s testamentary capacity and raised suspicions about the circumstances in which the will was prepared and executed. Theses circumstances required the court to be “vigilant and jealous in examining the evidence in support of the instrument”.[5] There were reasonable grounds for opposing the will on both grounds ultimately advanced at trial.
[5]Barry v Butlin [1838] 2 Moore 490, 482-3.
Mrs Meller was in part a cause of the litigation by making a will in circumstances that would almost certainly give rise to suspicion and a challenge to testamentary capacity[6]. The making of the will was procured by Mr and Mrs Foster and Ms Borde without discussion with the wider Meller family who they knew would be materially affected by the proposed changes.
[6]Perpetual Trustee Company Ltd v Baker [1999] NSWCA 244 at [14]
In exercising my discretion to order costs in this case I will do so on the basis that this case falls squarely within the first of the two principles referred to above. I propose to make an order that the defendant’s costs be paid out of the residuary estate. The remaining questions are whether some discount should be made in relation to the costs associated with Dr Sutcliffe; and the basis upon costs should be awarded.
There is some force in the plaintiffs’ submission that the defendants should not have costs in relation to Dr Sutcliffe. I reached the conclusion that the approach taken by the defendants in their request for an expert opinion from Dr Sutcliffe was misconceived. I did not regard Dr Sutcliffe’s expressions of opinion in his report of any great assistance. But, in other respects, I found his evidence to be useful, particularly concerning the cognitive ability of Mrs Meller at the time of his assessment of her and in providing some insight into the significance of temporal observations made by others, including nursing staff, of Mrs Meller’s condition. The residuary estate should not be required to bear the whole of the cost of and incidental to Dr Sutcliffe’s engagement and evidence. I would allow 25% of his costs incurred by the defendants as a reasonable sum for the defendants to recover from the estate.
The plaintiffs submitted that any order for costs in favour of the defendants should be on a party/party basis only and that there was no warrant to make an order on any other basis. I disagree. In Trust Company of Australia Limited v Daulizio & ors (No 2)[7] Mandie J ordered that the costs and expenses of the plaintiff and the second and third defendants, including any reserved costs, be taxed on a solicitor and client basis. In that case it was generally accepted by the parties that the costs should be calculated on a solicitor and client basis with the exception of the trust company which would be ordinarily entitled to costs on an indemnity basis. That concession was consistent with the decided cases.
[7][2003] VSC 381.
In my opinion this is a case where an investigation into Mrs Meller’s testamentary capacity and her knowledge and approval was not only justified, but necessary. The defendants are entitled to their costs on a solicitor/client basis.
I order that the defendants costs of and incidental to this proceeding, including reserved costs, be paid out of the residuary estate on a solicitor and client basis, save that in respect of the costs of and incidental to the engagement and evidence of Dr Sutcliffe, I allow only 25%.
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